The United States recession (which lead to a world recession), began in 1997 and significantly impacted the United States automobile industry during the recession period. The United States automobile industry is still reeling from the effects of the recession throughout the period of economic recovery that continues today. According to Chu and Su, “In this credit-driven recession, one of the hardest hit sectors was the automotive industry, along with the housing and financial markets. Chrysler and General Motors were pushed into bankruptcy; and 276,000 jobs in the automobile and parts industry were destroyed, a whopping 36 percent of the total employment in the sector”.
Currently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors (GM), Honda, Toyota, and Volkswagen. A few United States (US) manufacturers produce 23% of the world’s vehicles while Japan is responsible for 21%. The tendency for the industry is to be a global producer of automobiles; parts can be made throughout the world and assembled in many different places. The trend of consolidation has continued throughout today. Presently, this is evident in the recent acquisition of Chrysler by Daimler-Benz in late 1998, thus forming DaimlerChrylser. These consolidations have proved beneficial to consumers since companies have been able to reduce costs and pass those savings on to the customers. Some of the other major examples of consolidation are Nissan selling off a controlling 37% interest to Renault; General Motor’s 49% ownership of Isuzu; and Ford’s 33% majority of Mazda. Other efforts to become more competitive have translated into the European Union dropping trade barriers and European carmakers employing cost reducing efforts. American manufacturers have seen 2-3% growth over the last few years. Some current trends are the explosion in popularity of the Sport Utility Vehicle (SUV) and big luxury vehicles.
Starting in the 1920’s America began its shift towards a consumer culture as the economic growth of the nation began to depend more on the proliferation of consumer goods than of capital goods. Even at the outset of this trend, the automobile held a significant place in the new consumer economy. The automobile, which was once thought of as a rare luxury, was being sold by the millions. Assembly lines were becoming more efficient, thus allowing cars to be made more cheaply allowing the price of automobiles to drop. The growth of the automobile helped stimulate the economy through its dependence on other industries such as glass, rubber and steel, which were connected to the production of cars. These automobile related industries created new jobs, greater affluence and more spending power for millions of American consumers. Even at the beginning of America’s transformation into the consumer culture of today the automobile was at the forefront this conversion.
In the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...
The US market share of US companies immediately dropped, and despite strong efforts made by US manufacturers this has become the status quo. As of 2014 GM only commanded a 17.6% market share, Ford a 14.7% share, and Chrysler just 12.7%. In 2015 the Japanese car company, Toyota saw greater profits and all three of them combined(Investopedia). While the 2008 recession was global in scale and no county was spared foreign automakers were not hit as hard, nor did they need to expend resources reforming their companies, fighting legal battles, and developing new cars to meet new demands. It is this competition from foreign automakers that has been much of the drive for change in the US. Highly successful foreign cars, such as the Toyota Prius, has shown US manufacturers that hybrid and electric cars will be future of the auto
General Motors had surpassed Ford as the most popular automaker, now offering different models of vehicles that appealed to different social classes. The auto industry spurred growth in other industries such as oil exploration and production, the rubber industry, steel, and the expansion of corporations. During this era we is when we see The United States become the most powerful economy. Corporations and now seeking other opportunities abroad, an example of this is Ford expanding into Liberia to gain more control over the production of
Snyder, M. (2012, January 19). 17 Facts About The Decline Of The U.S. Auto Industry That Are Almost Too Crazy To Believe. The Economic Collapse. Retrieved November 17, 2013, from http://theeconomiccollapseblog.com/archives/17-facts-about-the-decline-of-the-u-s-auto-industry-that-are-almost-too-crazy-to-believe
Ever since the invention of the automobile, the car has been a large part of American life. Currently there are more than 16 million cars sold that are made in America (Magee, Ferrara, and LaMeau 149). It is something that is used every day in America by millions of people. The automobile opened the door for new opportunities and new experiences. It symbolizes the American ideal of freedom and independence. Americans have embraced the automobile and have implemented it into their lives. Automobiles fueled the American economy and helped establish a nationwide network of roads. Automobiles have had a great influence on American society through their history, the pioneers of the automotive industry, the companies involved in the automotive industry, and the highway system.
In 2008, the automotive industry suffered a big hit which caused a crisis in the United States economy. During the 2000s there was a phase known as the “SUV CRAZE” where the majority of sales for General Motors (G.M.) and Chrysler were “pickup trucks and sports utility vehicles”(Auto Industry Crisis). Trucks and SUVs have been known to use a lot of gasoline to help with their overall performance. But during 2003, the price of oil per barrel “went up from $30 to $135”(Rod Franchi). This caused the price of gasoline to rise and discouraged people from buying these big trucks that would use a lot of gasoline. This caused everything in the auto industry to go downhill. In 2007 around 16 million were sold, but in 2009 that number went down to 9 million cars sold. Now with fewer cars being sold G.M. and Chrysler were losing money and was desperate for help. With congress trying to find a solution, they proposed an auto bailout that would help the industry from dying. Although many argue the bailout gives an excuse to big car companies to fail, it was necessary because it helped save and create millions of jobs around the country.
General motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have included a graph which shows the decline in all of auto industry.